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Large punitive damages awards for discrimination have not fared well on appeal in New Jersey, but a recent case has diverged from the trend, or possibly has set a new one. On June 21, an Appellate Division panel upheld a punitive damages award of $1.8 million: more than six times the compensatory damages in the case, Baker v. National State Bank, A-1319-00. The judges also explicated how New Jersey courts should apply substantive due process principles for excessive punitive damages in the future. The suit was brought by branch managers whom the National State Bank fired in 1991. Ann Baker, then 54, and Barbara Hausleiter, then 49, were replaced by younger, less experienced people. The plaintiffs had originally won $4 million in punitives, and the case was appealed to the state supreme court. The justices remanded in 1999, seeking reconsideration of the award in light of the reprehensibility of the conduct, the extent of the plaintiffs’ harm and penalties in comparable situations. The court authorized the trial court to consider as a normative measure the 5-to-1 ratio of punitive to compensatory damages that limits awards in most types of cases, though not discrimination cases, under the 1995 Punitive Damages Act. Middlesex County Judge Martin Kravarik remitted the damages award to $1.8 million. Kravarik found that the bank “trashed” the plaintiffs’ reputations to justify the terminations. On appeal from that ruling, Judges Richard Newman, Robert Fall and Francine Axelrad described a four-tier “hierarchy of reprehensibility”: violent acts; acts of reckless disregard; trickery and deceit; and acts of omission or negligence. The bank’s actions, involving trickery and deceit, did not top the reprehensibility scale, but the panel found them egregious enough to merit punitive damages 6.35 times the compensatory damages of $283,324. For purposes of the ratio, the appeals court considered damages for front and back pay and emotional distress, rejecting the plaintiffs’ argument for inclusion of attorney fees and the defense argument that emotional distress damages were the sole measure. “The ruling certainly sends out notice to employers that if they discriminate they could be subject to substantial punitive damages,” and it will encourage them to settle, says Patricia Breuninger, a partner with Breuninger & Fellman in Scotch Plains who represents the plaintiffs. David Ganz, a partner with Somerset’s Collier, Jacob & Mills who represents the bank, declines to comment on whether his client will seek to appeal.

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